It is only a few minutes into our conversation that Delphine Mousseau, vice president of markets at online fashion retailer Zalando [IRDX RZAL] tells the story of how the company earned an award for the worst advertising in fashion. Not only is she not embarrassed about this, but she hoots with laughter when recalling that they went on to win the same award for a second time, the following year.
At the time, the German online fashion retailer, which launched in 2008 and today sells shoes and clothing from 1,500 brands, across 14 European markets, had just expanded into the Netherlands. Already serving customers in Austria and Switzerland, it assumed the same offering would work just as well there. Instead, it was ridiculed.
The company took the opportunity to learn from the experience and turned the knowledge – that to be successful in a new market you have to adapt to local tastes and ways of doing things – into one of the key pillars of its success. (The German adverts were successfully replaced with new Dutch ones.) Moreover, making mistakes and talking about them is seen as a normal part of business development.
“We still have this culture that it is OK to fail,” says Mousseau. “We do a lot of work with customers, trying to understand what will make their lives easier and their experience of fashion more enjoyable. We are trying out new things all the time, and not all of them are going to work.”
Often it is where things aren’t working, that the company sees an opportunity. One of the policies that sets Zalando apart from its competitors is its generous shipping and returns policy. All shipping and returns are free, and in most countries people have 100 days to return items. While this policy has proved popular in most markets, it was noticed that in Italy returns rates were low.
“Markets like Italy are not familiar with shopping online,” Mousseau explains. “Customers in Italy experience strong guilt about returning items. They feel like they are breaking an agreement, so we had to get the message across that it’s fine to return things and that it’s easy. We did a lot of advertising in Italy to explain this.”
On the street
One innovative approach it took was to demonstrate to people on Italian high streets how to do return items. “We rented out spaces in city centre, and did them out to look like a living room,” says Mousseau. “People could come in and order on a tablet, try on the goods, then return them. It was a way of connecting locally with customers.”
Because 29% of Italians don’t have bank accounts, another way into the market was to offer a cash-on-delivery service. “Our sales really picked up when we introduced paying cash to the delivery driver,” says Mousseau. “We also offer this service in Poland.
“Brand awareness, accessibility, fashion: you decide from these indicators what campaign you need to do. In some areas we are already compatible with the local market, in others we need to adjust. In Spain, the market is dominated by verticals like Zara, so what we need to communicate is that we are the cool place to get the niche brands.
In the Nordic countries, it is really important to stock Nordic brands. We need those brands to be credible, but it also gives us the opportunity to bring new brands into that market. The French market loves the fast fashion British brands like Top Shop and Dorothy Perkins: clothes at a low price point, but with a high fashion content.”
Sometimes small details make a big difference. “Switzerland is a great market for us,” says Mousseau. “We used to cater for them with our German customer service department, but satisfaction went up when we hired Swiss-German speakers. We now have 12 different languages including ‘Belgium-French’, as well as ‘French-French’. It’s that kind of attention to detail that makes customers feel at home with us.”
Make things easy for the customer
But it is the ease of the overall ordering and returns experience that has the greatest impact. “If you look at our website there are a lot of brands,” says Mousseau. “We can cater for anyone’s style but people still don’t feel buying online is as easy as going into a store. We want to turn that around. We have worked a lot on the return experience, to make it as easy as possible – things like putting the labels ready in the parcel so all you need to do is to stick them on.
“In the big cities in the Netherlands, you just go onto the site of our partner couriers and someone will pick up your returns within half an hour. People are really satisfied with this kind of service. They don’t have to think about when they are going to be able to return things.
In France the mail boxes are all the same size. They can accommodate a shoe box. So we set up a service where you put your returns back in your mailbox and the postman takes them away. Our parcels were slightly too big originally, so we reduced the size and now they fit. These are the kind of innovations we think will make a major change to online fashion retail.”
This interview appears in the latest IREU Top500 Performance Dimension Report on Strategy and Innovation. To download the report, click here. To explore the series further, click here.